Acquisition Agreement North Laverton Western Australia

FOCUS TECHNOLOGIES LIMITED 2002-08-16 ASX-SIGNAL-G
HOMEX - Brisbane
+++++++++++++++++++++++++
OVERVIEW
Focus Tecnologies Limited (Focus) has entered into an Acquisition
Agreement with Sons of Gwalia Ltd ("SGW") whereby Focus will
purchase, subject to certain conditions, 6 groups of tenements plus a
gold treatment plant and related surface infrastructure ("the
Assets") in the northern portion of the Laverton Tectonic Zone
("LTZ"), north east of Kalgoorlie in Western Australia.
The consideration for the acquisition of the Assets from SGW will be
for an amount of $2.68 million to be satisfied by a combination of
cash and shares in Focus. SGW will hold approximately 16% of the
fully diluted capital of Focus after raising $5 million required to
fund the acquisition and related developments, known as the "Laverton
Project".
The tenements cover an extensive area within the North Laverton
Regional Goldfield, in a historically important mineral field.
The Laverton Treatment Plant with a nominal capacity of 1 million
tonnes per annum located near the town of Laverton, Western
Australia, is included in the purchase price. The plant has been on a
limited care and maintenance programme since processing ceased in
1998.
THE BUSINESS OPPORTUNITY
The Laverton Project is considered to be an outstanding opportunity
to gain a foothold in one of the most prospective gold areas in
Western Australia. Recent discoveries of large ore bodies and the
involvement of major companies in the area are a testament to the
highly regarded prospectivity of the Laverton region. Main features
of the Laverton project are:
* Delineated indicated and inferred resources of 11.8 million tonnes
at an average grade of 1.87 g/t for 710,000 ounces of gold. Proposed
open pit production of 1.57 million tonnes at 2.32 g/t containing
117,238 ounces of gold that have mine designs completed and wait
detailed feasibility to bring them to a decision to mine. Stockpiles
of an additional 0.9 million tonnes exist at 0.60 g/t for an
additional 17,361 ounces. SRK Consulting has been retained by Focus
for the last 2 months of due diligence and has conducted extensive
resource and reserve modeling and cost evaluation studies.
* A treatment plant with a capacity of approximately 1.0 million tpa
- currently on care and maintenance.
* Scoping studies which have been completed indicate that the mining
operation can be completed with the existing reserves. At a gold
price of AUD$575/oz a return on investment ("IRR") of 21% is forecast
with a Net Present Value ("NPV") of A$6.4 million at a discount rate
of 10%. At a gold price of A$550/oz the forecast IRR is 15% and NPV
A$4.1 million. This does not include any increase in the gold price
which may be attained using hedging facilities. Given the time to
delivery a gold price of A$600/oz may be achievable.
* Toll treatment and acquisition opportunities exist at deposits
within the region that could provide additional income.
* Numerous opportunities for the development of high grade low tonne
underground mining situations exit below or adjacent to existing
pits. This aspect has received little attention from earlier
explorers.
* Exploration opportunities in 8 target areas with detailed drilling
and preliminary work completed. The targets have the capacity to
expand the existing resources and reserves.
* Environmental liabilities are significant but not onerous. These
have been factored in to the cash flow model.
OPERATING STRATEGIES
Focus will examine a number of complementary strategies to bring the
Laverton Project to further development. They include:
1. Mine exploration adjacent to known resources and reserves to
expand the reserves and mine schedule and increase current life of
mine.
2. Refurbishment and commissioning of the Laverton Plant to treat the
available reserves.
3. Regional exploration programs to establish a more extensive
resource and reserve base. This will have the advantage of providing
well planned mine and production scheduling of the mining phase and
allow higher grade targets to be brought to development in the early
part of the mining schedule.
4.Examination of toll treatment and acquisition/joint venture
opportunities. This will enhance mine life and cash flow to establish
the optimum Life of Mine plan.
5. Examine the possibility of heap leach treatment and alternative
mining strategies of the lower grade resources available.
MORE TO FOLLOW
1